Making cents of the metals market

It has been a while since I tried to make sense of the metals markets for numismatics. Then again, it has been said that even the professionals cannot make sense of the markets, how do we expect an amateur to do so. After all, it was not long ago when analysts were asking when, not if, gold will hit $2,000 per ounce and silver will be $50. As I type this the spot price of gold is $1137.40 per ounce and silver is at $14.68.

Watching the price of gold has been interesting. Since the release of the 2014 50th Anniversary Kennedy 2014 Half-Dollar Gold Proof Coin when the price of gold was set based on the $1,290.50 spot price, the trend of gold prices has been to go lower. Gold spot hit a low almost one year to the day of the release of the Kennedy gold coin on August 5, 2015 at $1,085.10. It has taken three weeks to bounce back a little.

Gold Chart for August to date (does not update)

I call silver the precious metal for the masses. Aside from being less expensive it is still considered a valuable commodity. Aside from the aesthetics of the color (I love the look of chrome on cars) you can really see a great design on a larger silver coin than a gold coin for a lower cost. For example, I like the look of the larger Silver Panda over the yellow gold Panda—and it is cheaper!

While my interest is more of aesthetics and the costs between purchasing the different types of coins, you can get into a situation where the composition determines the price of a coin. After all, the most expensive coin to sell at auction was a 1794 Flowing Hair silver dollar with a rare die variety. For a non-precious metal coin, you can always look at the 1913 Liberty Head Nickels whose composition is 75-percent copper and 25-percent nickel. Sales of these coins have averaged around $3-5 million in the last few auctions.

Rare and key date coins notwithstanding, more people can afford silver than gold. As a result, we have seen a rise in the collecting of silver non-circulated legal tender (NCLT) coins. Although I am not a fan of many of these designs, the various mints creating them would stop if there was not a market for them. Since this is what people are buying, the mints are striking.

To some degree, the price of silver may be inconsequential to the cost of some of these NCLT sets. Coins like the Looney Tunes and DC Comics sets from the Royal Canadian Mint; Star Wars, Disney, and Dr. Who sets from the New Zealand Mint are priced to include royalties that will have to be paid to their respective copyright holders.

Royal Canadian Mint’s $100 Looney Tunes 14-karat Reverse

Could this Looney Tunes Silver Kilo coin be on your list?

Then there are the countries of Somalia, Niue, Tuvalu, and the Marshall Islands that do have their own mints but license their names or contract other mints to strike coins for them. Even though these coins may not require licensing fees, many are made with popular themes to entice collectors to purchase them. Seigniorage then goes to both the mint striking the coins and the general treasuries of country whose name is on the coin.

2007 Somalia Motorcycle Coins

2010 Somalia Sports Cars

Most mints will float the price of their bullion coins to reflect market forces but not the price of NCLT coins. Even the U.S. Mint does not adjust the price of commemorative coins if the price of the metals drops.

While there are collectors that view their collection in terms of its value and others collecting as an investment of those of us who collect for the sake of collecting, the dropping of metals prices can be seen as an opportunity to buy some nice collectibles cheaper than otherwise. However, never underestimate the greed of some of these mints and the companies that sign agreements with them that will keep your prices high.